Britain may have to pay billions to rescue euro

BRITISH taxpayers face having to pour billions into a new bail-out of failing euro economies under plans being hammered out by EU chiefs last night.

EURO Chancellor Alistair Darling EURO: Chancellor Alistair Darling

Finance ministers in Brussels were discussing a £50billion emergency rescue plan designed to pump cash into debt-ridden countries such as Greece.

But anger was growing that the UK was being dragged into the “European stabilisation mechanism” despite not being part of the euro.

Chancellor Alistair Darling – representing the UK while a new government is still being formed at Westminster – was trying to resist the move last night.

But Britain’s opposition was set to be vetoed under the EU’s qualified majority voting system.

Mats Persson, of the think-tank Open Europe, said: “It is extraordinary that these proposals have been stitched up by the leaders of the euro-zone countries. It could mean British taxpayers being liable for up to £10billion of debts.

“This is exactly what was never supposed to happen – British taxpayers becoming liable for the mess created by the failed euro experiment.

“While it’s in everyone’s interest for Europe’s economy to stabilise, this deal cannot be allowed to set a precedent, which would see taxpayers becoming exposed to ever-growing debt burdens of governments over which they have no democratic control.”

The scheme would involve setting up an EU version of the International Monetary Fund, with all member states exposed to risk from national coffers if a member state defaults on loans backed by its EU partners.

Another option, favoured by the UK, would allow the  European Commission to borrow on behalf of a member state in financial trouble, using the EU budget as collateral. Mr Darling said while Britain wanted to see stability restored, it was up to euro-zone countries to support the euro.

He said: “It is clearly in our interest that everything is done in Europe to try to stabilise the situation.

“But I am very, very clear that if there is a proposal to create a stability fund for the euro, that has got to be a matter for the euro-group countries.“What we will not do and what we can’t do is to provide support for the euro. That has got to be for those countries that use the euro.”

Mr Darling was keeping the Lib Dem and Tory Treasury teams up to date with the talks last night.

Pressure was on to agree the deal by the time financial markets open today, in the hope that the latest attempt to talk up the euro will revive its fortunes and calm investors’ panic about the single currency’s survival prospects.

Ministers from the 16 euro-zone countries have already approved a £95billion bail-out for Greece and the UK is determined not to be drawn into a massive funding which would widen financial responsibility to all 27 countries when it is the single currency that is in trouble.

Yesterday, the IMF approved a £26billion loan for Greece.

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